Amazon and Google and Bricks and Mortar
Daniel Edward Rosen May 22, 2012, 8:35 a.m.
In the nebulous realm of the World Wide Web, tech entities like Google and Amazon have the reach, the customer base and the income that have helped transform them from plucky start-ups into virtual mega-Wal-Marts—too big to fail, and omnipresent in practically every state, city, town and household.
But when it comes to an actual brick-and-mortar storefront, the tech titans pale in comparison.
Google, as seemingly inseparable as it has become from one’s daily life, doesn’t sell tangible products. It offers Android, an operating system for smartphones, which is then sold off by third-party retailers like Verizon and Best Buy. But beyond that, its inventory is unknown.
Amazon’s ascendance in the virtual marketplace has spelled the eventual death of bookstores like Borders and electriconics retailers like Circuit City.
Sure, the company had its Kindles to sell, along with a new book publishing line that Barnes & Noble, Books-a-Million and Chapters Indigo have already pledged to boycott from selling in its stores. But Kindles and titles from a fledgling imprint is enough to fill up a boutique store, not a 100,000-square-foot big box. Amazon is reportedly happy to go the boutique route, with plans to rent a small retail space in Seattle to test out the concept for a possible national expansion (Amazon declined to comment for this story).
During CBRE’s 2011 third-quarter media briefing last fall, David LaPierre predicted that both Amazon and Google would be snooping around for retail space in Times Square.
While Google has yet to put a stake into the Crossroads of the World, Mr. LaPierre believes it’s inevitable that Google (or a similar tech entity) will be selling its nondescript wares in person.
“I really do feel like it’s a matter of time, but I don’t think many of these companies have necessarily engaged a plan yet where we’re actually looking at bricks and mortar,” Mr. LaPierre said last week.
Since his prediction, Google was reported to be filing paperwork to open its very first retail store in Dublin, Ireland, selling as-yet-to-be-specified products.
Google would not comment on its retail strategy during an interview with The Commercial Observer.
“Google is actually focused … on improving user experience on the web with respect to commerce and helping folks figure out the best thing to buy. At this point, we have nothing to announce,” said Todd Pollack, Google’s retail director.
But it doesn’t matter what the company sells. The visibility of a Times Square storefront, despite the high cost of occupancy, is no different than spending millions for a 30-second ad during the Super Bowl.
“New York’s a natural place to put up a physical marketing and branding site,” said Will Ander, a senior partner at McMillanDolittle, a Chicago-based retail consulting firm. “I don’t think they are trying to make money from a product point of view. [If they were], we would see 20 of them or 50 of them in the year.”
Years after scaling back on its retail strategy, Microsoft has recently kick-started a new campaign to eventually open 75 stores nationwide over the next few years. The plan is conveniently timed for the release of Windows 8, its latest operating software, sometime this year.
While the Seattle-based software maker may not replicate the success of Apple’s retail campaign (more than 240 stores nationwide and counting), opening its own stores, such as the latest one in Bridgewater Commons in New Jersey, will help bring the Microsoft brand back to the consumer instead of relying on third-party vendors to do the trick.
“When you go into a broader-based electronics user, they’re supposed to be a master of many products,” Mr. LaPierre said. A sales clerk at Best Buy may not be as intimately knowledgeable about a Windows smartphone as a clerk working at a Microsoft store, for instace.
Better instead to mimic the Apple model, where not only is the brand’s arsenal of popular products available under one roof, but an army of salespeople and technicians are there to walk each consumer through any of his or her queries about the hardware, software or other assorted Apple-related miscellany.
Then there is the younger batch of web entities, such as Gilt Groupe and Etsy, which offer fashionable fare on the web, often at a discount. Some speculate that they, too, may be poised for a storefront of their own.
“Amazon and Etsy would be the equivalent of catalog companies establishing a brick-and-mortar [presence], a strategy as old as Sears,” said Faith Hope Consolo, chair of the retail group at Prudential Douglas Elliman Real Estate.
An Etsy spokesman told The Commercial Observer that the company does not have plans to open a pop-up or permanent retail space.
Gilt Groupe has hosted physical sample sales in various cities, including New York. Last Christmas, Gilt Groupe—along with men’s magazine GQ—hosted a two-week pop-up store in the Meatpacking district for Park & Bond, its full-price men’s wear business. The company also does not have plans to open a full-time retail store, said a Gilt Groupe spokeswoman.
If Gilt Groupe or Etsy ever decides to change course, they would have an easier time selling clothing than other tech companies would have by selling those indescribable widgets.